Insurance fees

The cost of health insurance usually involves monthly premiums as well as other financial responsibilities, such as copays and coinsurance.

Although these terms seem the same, these cost-sharing arrangements work somewhat differently. Here’s a breakdown:

  • Coinsurance. You pay a fixed percentage (such as 20 percent) of the cost of every medical service you receive. Your insurance company is responsible for the remaining percentage.
  • Copay. You pay a fixed amount for particular services. For example, you may have to pay a $20 copay every time you see your primary care doctor. Seeing a specialist may require a higher, predetermined copay.

Another cost-sharing consideration is known as a deductible. Your annual deductible is the amount of money you’ll pay for services before your health insurance starts to pick up those costs.

Depending on your health insurance plan, your deductible could be a few hundred or several thousand dollars each year.

Read on to learn more about coinsurance and copays and how they affect the amount of money you’ll owe when you receive medical services.

Understanding copays, coinsurance, and deductibles can help prepare you for the costs of receiving medical treatment.

Some types of visits will only require a copay. Other types of visits will require you pay a percentage of the total bill (coinsurance), which would go toward your deductible, plus a copay. For other visits, you may be billed for the full amount of the visit but pay no copay.

If you have a plan that covers 100 percent of well-visits (yearly checkups), you’d only be required to pay your predetermined copay.

If your plan only covers $100 toward a well-visit, you’d be responsible for the copay plus the remaining cost of the visit.

For example, if your copay is $25 and the total cost for the visit is $300, you’d be responsible for $200 — $175 of which would count toward your deductible.

However, if you’ve already met your full deductible for the year, then you’d only be responsible for the $25 copay.

If you have a coinsurance plan and have hit your full deductible, you’ll pay a percentage of that $300 well-visit. If your coinsurance rate is 20 percent, with your insurer covering the other 80 percent, then you’d have to pay $60. Your insurance company would cover the remaining $240.

Always check with your insurance company to make sure you know what’s covered and what your responsibilities are for various services. You can also call the doctor’s office and ask about the expected cost of your treatment before going to your appointment.

Most health insurance plans have what’s called an “out-of-pocket maximum.” It’s the most you’ll pay in a given year for services covered by your plan.

Once you’ve spent your maximum in copays, coinsurance, and deductibles, your insurance company should cover 100 percent of any additional costs.

Keep in mind that out-of-pocket totals don’t include money paid by your insurance company to your doctor or other healthcare provider. The figure is strictly money you paid for healthcare.

Also, an individual plan will have a much lower out-of-pocket maximum than a plan that covers an entire family. Be aware of that difference as you start to budget your healthcare expenses.

Health insurance is designed to protect individuals and families from the rising costs of healthcare. It’s not usually very cheap, but it can save you money in the long term.

Insurers require monthly premiums. These are payments you make to the insurance company every month so you have insurance to cover routine and catastrophic concerns.

You pay premiums whether you visit a doctor once a year or spend months in a hospital. Typically, you’ll pay lower monthly premiums for a plan with a high deductible. As the deductible goes down, the monthly costs typically increase.

Health insurance is often provided by employers to full-time employees. Small companies with only a handful of employees may not choose to provide health insurance because of the expense.

You may also choose to obtain health insurance on your own from a private insurance company, even if you’re employed full time and have the option for employer-sponsored health insurance.

When you obtain health insurance, you should receive a list of covered costs. For example, a trip to the emergency room in an ambulance may cost $250.

Under a plan like this, if you haven’t met your deductible and you go to the emergency room in an ambulance, you must pay $250. If you’ve met your deductible and ambulance rides are covered 100 percent, then your ride should be free.

In some plans, major surgery is covered at 100 percent, while checkups or screenings may only be covered at 80 percent. This means you’re responsible for the remaining 20 percent.

It’s important to review copays, coinsurance, and deductibles when choosing a plan. Keep in mind your health history.

If you’re expecting to have major surgery or deliver a baby in the coming year, you may want to pick a plan where the insurance provider covers a higher percentage for these types of procedures.

Because you can never predict accidents or future health concerns, also consider how much you can afford to pay each month and how much you could afford if you had an unexpected health condition.

That’s why it’s important to look at and consider all of the expected costs, including:

  • deductible
  • out-of-pocket maximum
  • monthly premium
  • copays
  • coinsurance

Understanding these expenses can help you understand the maximum amount of money you may owe if you require a lot of health services in a given year.

In terms of health insurance, a network is a collection of hospitals, doctors, and other providers that signed on to be preferred providers on your insurance plan.

These are in-network providers. They’re the ones your insurance company prefers you see.

Out-of-network providers are simply those who aren’t signed on to your plan. Seeing out-of-network providers may mean higher out-of-pocket costs. Those costs may not apply toward your deductible.

Again, it’s important to make sure you know the ins and outs of your insurance plan so you know who and what are covered. An out-of-network doctor may be in your hometown, or they may be someone you see when you’re traveling.

If you’re unsure if your preferred doctor is in-network, you can call the insurance provider or your doctor’s office to find out.

Sometimes doctors drop out of or join a new network, too. Confirming your doctor’s network status before each visit can help you avoid unexpected costs.

Health insurance can be a complicated matter. If you have insurance through your employer, ask who at your employer is the contact person for questions. It’s usually someone in the human resources department, but not always.

Your insurance company should also have a customer service department to answer your questions.

The most important things to keep in mind when starting an insurance plan is to know:

  • all of your costs
  • when your plan takes effect (many insurance plans change in the middle of the year)
  • what services are covered and for how much

You may not plan on a major operation or injury, but insurance can help reduce the financial burden if you experience a major medical problem.